Buchanan asked to forgive $250,000 development loan

Commissioners take matter under advisement.

Commissioners take matter under advisement.

March 25, 2009|By STAN MADDUX Tribune Correspondent

BUCHANAN -- The city of Buchanan is being asked to forgive a $250,000 loan to the city's Downtown Development Authority. The request was made by the DDA at this week's meeting of the Buchanan City Commissioners, who initially expressed reluctance given the bad economy. Commissioner Carla Cole said the city has been forced to scale back its budget at a time when departments like police and fire have needs such as new vehicles. "I don't think it's fair to the taxpayers right now," Cole said. Cole said she would be more open-minded about the idea once the economy improves. Commissioner William Norton expressed similar thoughts. "Two-hundred fifty thousand is an awful big sum of money," he said. The commissioners decided to take the request under advisement following a presentation by DDA board member Alice Kring. When the loan was issued in 2007, Kring said the DDA was under the impression there would be no strings attached to the funds. "We were told don't worry about paying this back," she said. The loan originated from about $800,000 that had accumulated in the Andrews Farm Industrial Park tax incremental financing district over a period of nearly two decades as the park developed and money was produced from increases in the assessed valuation. When the industrial park reached full occupancy, the city and county struck a deal that relinquished those dollars to the city as long as they were invested back into the TIF. Had there not been such a deal, Kring said the county would have taken the dollars and redistributed them to various taxing agencies. "It really wasn't city money that was going to be used," she said. Kring also told the commissioners the DDA owns City Hall and doesn't charge the city rent for the building. "Think about that when you make the decision," Kring said. The DDA has already used $165,000 as cash incentives for property owners to improve their buildings in the downtown. According to DDA officials, the program has resulted in the renovation of six downtown buildings. One storefront has been filled and three other businesses are slated to open in May. The DDA is currently proposing to use the dollars to offer loans and grants to promote additional improvements. "We have used the money wisely and we'd continue to put the money into the downtown," said Debra Patzer, director of the Downtown Development Authority. Repayment of the loan is set to begin in 2011 at $25,000 annually. Patzer said the yearly installments would represent a large chunk of the DDA's annual $90,000 budget. The DDA receives its operating money from tax dollars generated by improvements within the downtown area. The DDA has the authority to levy up to 2 mills on property owners within the district to generate additional revenue. So far, no taxes have been levied. Patzer said 2 mills would generate only about $15,000 per year. Buchanan City Manager Meg Mullendore said she was not aware of any prior agreement from the prior commission to forgive the loan.